Union advises caution from bank employees over settlement from HSBC on brokerage business

The Independent Bankers Union said that the compensation related to what the bank itself described as a ‘legacy operational and regulatory failure in the bank’s now closed brokerage business’

The Independent Bankers Union has warned its members to 'act with caution before accepting any money in full and final settlement over issues with HSBC's now closed brokerage business
The Independent Bankers Union has warned its members to 'act with caution before accepting any money in full and final settlement over issues with HSBC's now closed brokerage business

The Independent Bankers Union (IBU) has warned its members to “act with caution before accepting any money in full and final settlement” in relation to what it said HSBC banks itself described as a “legacy operational and regulatory failure in the bank’s now closed brokerage business”.

The IBU urged those affected to seek professional advice before signing any waivers in favour of HSBC, in return for a compensation which may be far less than what they are entitled to receive by law. “The IBU received complaints from its members who are also customers of HSBC, about the fact that they are being offered an inferior settlement amount than their true legal entitlement for compensation,” read the statement by the union.

It said that in its correspondence with stakeholders, HSBC was using statements such as “the actions followed were established in discussion with the MFSA” which the IBU said it perceived as being highly misleading.

“They project a false sense of reassurance,” said the IBU. “Such statements seem to incorrectly imply that the selection of customers eligible for compensation, as well as the basis and amount of such compensation carries the approval of MFSA.”

It stressed that its members needed to be aware of the fact that “a possibility exists were they may be entitled to a higher compensation than the amount which they are being offered, but should they sign a waiver, they will no longer be able to recover the difference”.

“The Independent Bankers Union has already contacted MFSA urging it to intervene so that customers of the bank are not misled and they are paid their full legal entitlement resulting out of HSBC’s self-admitted breach of the law,” it said.

The IBU added that it would be taking the necessary action to safeguard the interest of its members and urged both the existing members, as well as all individuals who are eligible to become members to make contact with the union as soon as possible.

HSBC employees have accused the bank of discrimination for refusing to compensate them for losses incurred through “complex investments” it sold to them without conducting an “appropriateness assessment”.

Under EU law, an assessment was mandatory to ensure that clients had the necessary expertise to handle such an investment before committing themselves to paying huge sums of money, the employees noted. If the procedure was not followed, customers who subsequently lost their investments could be eligible for compensation, they added.

HSBC said in a company announcement last February that a provision of €8 million had been made in relation to “a legacy operational and regulatory failure in the bank’s now-closed brokerage business”.

Following discussions with the Malta Financial Services Authority, earlier this month, the bank said it planned to commence a remediation process. The matter affected about 1,300 customers, some of whom had lost over €100,000, banking sources said